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Obama: GOP doesn't get to demand ransom

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Obama: "I will talk about anything" after debt ceiling hike, government reopens

Boehner says there will be no "unconditional surrender" by Republicans

Expert: Not raising the debt ceiling could lead to recession, worse

President Barack Obama is ready to talk even on Republicans' terms, he insisted Tuesday, so long as Congress acts first to end the government shutdown and raise the debt ceiling -- even for a short period.

At a news conference, Obama indicated Republicans could essentially set the agenda for budget negotiations, but only if Congress agrees first to a short-term spending plan to fund the government and to raise the federal borrowing limit to avoid a possible first-ever U.S. default next week.

"I will talk about anything," the president said.

House Speaker John Boehner, speaking Tuesday afternoon after what he called a "pleasant" but ineffectual phone call with Obama, promptly rejected the president's comments as nothing new.

"What the president said today was if there's unconditional surrender by Republicans, he'll sit down and talk to us," Boehner said. "That's not the way our government works."

At the same time, Boehner said he's "hopeful" top Republicans and Democrats could soon begin a "conversation."

"There's going to be a negotiation here," the Ohio Republican said. "We can't raise the debt ceiling without doing something about what's driving it to borrow more money and live beyond our means."

Newt Gingrich: Obama should negotiate

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Can we tone down the shutdown rhetoric?

Yet while Boehner didn't indicate any points of agreement, a senior House Republican told CNN's Dana Bash that GOP members may be willing to go for a short-term debt ceiling hike -- lasting four to six weeks -- as long as the president agrees negotiations will occur during that time.

Still, it's no guarantee such a measure would be supported by a majority of Republicans: something that Boehner has traditionally required before calling any vote in the House.

A second GOP source says the White House drawing a line in the sand not to negotiate has further complicated matters. Republican leaders have talked, though, to CEOs who called them at the request of Treasury Secretary Jack Lew and senior presidential adviser Valerie Jarrett.

And if there's no breakthrough? The partial government shutdown -- which began October 1, after the GOP-led House tied its funding measures to dismantling or defunding Obama's signature health care reform rather -- continues. Plus, another crisis looms October 17, when the Treasury Department says the U.S. government must raise the amount of money it can borrow or else be unable to pay its bills.

All the partisan bickering -- and lack of progress -- is taking its toll not just on furloughed workers, shuttered government facilities and programs, but also Americans confidence in their government.

Looking directly in the camera, Obama acknowledged frustrations with what's going in Washington -- in terms of the current impasse and all the other budgetary battles preceding it.

"We've got to stop repeating this pattern," the president said. "I apologize you have to go through this stuff every three months, it seems like. And Lord knows, I'm tired of it. But at some point we've got to break these habits."

Boehner: Can't afford to keep spending without cuts

While the partial government shutdown is now in its second week, next week's deadline to raise the debt ceiling has many experts especially worried. Failure to act, they say, could lead to the government defaulting on its debt, spook Wall Street, spur higher interest rates and have other negative effects on the U.S. and global economy.

"If there was a problem lifting the debt ceiling, it could well be what is now a recovery would turn into a recession or even worse," said Olivier Blanchard, an International Monetary Fund economist.

On Tuesday, Obama sternly warned that "every American could see their 401(k)s and home values fall" and the country would see a "very significant risk" of a deep recession. The only responsible action, he repeated: raise the debt ceiling, without preconditions.

"We're not going to pay ransom for" America paying its bills, he told reporters, placing the blame squarely on House Republicans. "Let's lift these threats from our families and our businesses and let's get down to work."

In his remarks Tuesday afternoon, Boehner didn't appear to give ground either. The president's refusal to talk -- until the government reopens and the debt ceiling is hiked -- is "not sustainable," according to Boehner.

"The idea that we should continue to spend money that we don't have and give the bill to my kids and grandkids would be wrong," he said.

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Coping with shutdown stress

Key players in the shutdown debate – The game is the same, but many of the players have changed. Congress and the president are facing off in another supreme spending showdown. This last happened in 2011, when Congress avoided a shutdown by passing a spending measure shortly after the midnight deadline hit. Who controls what happens this time? Take a look at the key players who will determine how this fight ends.

Key players in the shutdown debate – Rep. Mark Meadows, R-North Carolina --The architect. During Congress' August recess, the tea party-backed freshman wrote to Republican leaders suggesting that they tie dismantling Obamacare to the funding bill. Though initially rejected by GOP leadership, 79 of Meadows' House colleagues signed on to the letter, which quoted James Madison writing in the Federalist Papers, "the power over the purse may, in fact, be regarded as the most complete and effectual weapon ... for obtaining a redress of every grievance."

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Key players in the shutdown debate – Speaker John Boehner, R-Ohio -- The coach. He'll make the key play call. The top Republican leader in the land may be the most important player in the days immediately before a possible shutdown. Boehner could decide whether to push through the Senate's version of a spending bill and keep government running, or he could float a third version with some other Republican wish list items in it. If he takes the second option, Boehner could risk a shutdown but could also force the Senate into a tough position: give House Republicans something or send federal workers home. Timing on all this will be critical.

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Key players in the shutdown debate – Sen. Ted Cruz, R-Texas -- The revolutionary or rabble rouser, depending on your viewpoint. The tea party firebrand could lead a long filibuster on the Senate floor, delaying passage of a spending bill until just one day before the deadline on Monday, September 30. Cruz has stoked the anti-Obamacare flames all summer, but recently angered fellow Republicans by openly saying that the Senate does not have the votes to repeal the health care law.

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Key players in the shutdown debate – Sen. Marco Rubio, R-Florida -- Senator to watch. The potential presidential candidate has been one of three senators (Cruz and Mike Lee, R-Utah, being the others) pushing to use the government shutdown debate as a way to repeal or defund Obamacare. But watch his actions and language as a shutdown nears to see if he digs in or if downshifts at all.

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Key players in the shutdown debate – Sen. Harry Reid, D-Nevada -- The man steering the ship in the Senate. Master at using Senate procedure to his advantage, Reid is the main force in controlling the voting process in the chamber and ensuring that an attempted filibuster by tea party-types fails. The majority leader will be a primary negotiator if we reach phase three, if the House does not accept the Senate spending bill.

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Key players in the shutdown debate – Sen. Mitch McConnell, R-Kentucky -- If Reid steers the ship, McConnell controls the headwinds. Which is good news for Reid, at least initially. The Republican leader and several of his members say they will vote against Cruz's filibuster and in favor of a spending bill with no limits on Obamacare. Meaning, in favor of a bill that just funds government. McConnell generally has been leery of running into a shutdown or default. In fact, one legislative method for avoiding default is named after him.

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Key players in the shutdown debate – Sen. Patty Murray, D-Washington -- The consigliore. Murray, center, does not seek the outside limelight, but the Senate Budget Committee chairwoman is a major fiscal force behind the scenes on Capitol Hill. Known by fellow Democrats as a straight shooter, she is also an experienced negotiator, having co-chaired the laborious, somewhat torturous and unsuccessful Super Committee.

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Key players in the shutdown debate – Rep. Tom Graves, R-Georgia -- The new militia leader. The freshman congressman from Georgia, second from right, is one reason the debate has reached this point. Graves led the charge that blocked the original proposal by House Republican leaders. That would have kept government funded and had a detachable portion on Obamacare. Instead Graves and other conservatives forced their leaders to pass a spending bill with a mandatory defunding of Obamacare.

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Key players in the shutdown debate – Rep. Peter King, R-New York -- The blunt statesman. King is outspoken against many tea party tactics, calling the move to tie Obamacare to the must-pass spending bill essentially a suicide mission and Cruz "a fraud." He is pushing for Republicans to accept a more "clean" spending bill that can pass the Senate and avoid a shutdown.

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Key players in the shutdown debate – Thomas Donohue, president and CEO of the U.S. Chamber of Commerce -- The heavy. Donohue is known for his deep connections and his aggressive lobbying on behalf of business. He and the Chamber are urging Republican lawmakers to avoid a shutdown. The Chamber is an important political backer for conservatives, but has had mixed success with the current Congress, locking in firm anti-tax positions but unable to push through immigration reform so far.

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Key players in the shutdown debate – Michael Needham, president of Heritage Action -- The driving force. Needham runs the political offshoot of the conservative Heritage Foundation and has been unrelenting in urging lawmakers to repeal Obamacare. He has told Republicans not to fear a potential shutdown, saying they would suffer more politically from allowing Obamacare to continue.

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Key players in the shutdown debate – President Barack Obama -- The campaigner and CEO. Expect the president to use his podium more as a shutdown nears, aiming at public opinion as Democrats in Congress position themselves. If House Republicans send back a new proposal close to the September 30 deadline, the president and Democrats will have to decide what move to make next.

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Key players in the shutdown debate – Rep. Eric Cantor, R-Virginia -- The powerful lieutenant. Cantor, the House Republican No. 2, is much more closely allied with conservatives and tea party members in the House than is Speaker Boehner. The two have not always agreed on every strategy during potential shutdown debates, but have been in public lockstep during the current go-around.

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Key players in the shutdown debate – Rep. Nancy Pelosi, D-California, and Steny Hoyer, D-Maryland -- Players on deck. The top two House Democrats are mostly watching and waiting. But they will play a critical role once Boehner decides his next move. They could either bring Democratic votes on board a deal or be the loudest voices against a new Republican alternative. Hoyer will be interesting to watch; he has strongly opposed both the House and Senate plans as cutting too much in spending.

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Key players in the shutdown debate – Rep. Kevin McCarthy, R-California -- The numbers guy. McCarthy, the House whip, has the tricky job of assessing exactly where Republican members stand and getting the 217 votes it takes to pass a bill in the chamber. He is known for his outreach to and connection with many of the freshmen House members who align with the tea party.

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Key players in the shutdown debate – Rep. Paul Ryan, R-Wisconsin -- Member to watch. The vote of the House budget chairman and former vice presidential nominee is an important signal both within Republican ranks and to the public at large. Ryan has voted against some funding measures in the past, including the emergency aid for Superstorm Sandy recovery. But he was a "yes" on the last extension of the debt ceiling.

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Key players in the shutdown debate – Rep. Ileana Ros-Lehtinen, R-Florida -- Another member to watch. A former committee chairwoman (Republican rules have term limits for committee chairs), Ros-Lehtinen knows House politics and procedure inside out. Depending on the issue, she has been described as a conservative or moderate, and occasionally as a libertarian.

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EXPAND GALLERY

GOP-led House, Democratic-led Senate offer plans

Boehner and conservative Republicans want to leverage the situation to wring concessions on deficit reduction from Democrats.

To keep up pressure, House Republicans voted Tuesday to set up negotiations on the debt limit and other fiscal issues. Rep. Tom Cole of Oklahoma, a GOP leader in the House, said such a negotiating committee with members of both parties could pass a short-term extension of the debt ceiling while doing its work.

"I suspect we can work out some mechanism to raise the debt ceiling while negotiations are under way," Cole said. "But we're not going to simply raise it without talking about the deficit," Cole said. It was unclear if his description would satisfy Obama's insistence that the debt ceiling increase must be separate from political negotiations.

Yet Senate Democrats have dismissed the proposal, and the Obama administration has vowed to veto any such. Democratic Sen. Chuck Schumer of New York called these other GOP offers the latest in a series of "new gimmicks" that avoid the imminent need to fully reopen the government and raise the debt ceiling.

In the Senate, Majority Leader Harry Reid and Sen. Max Baucus filed a proposal Tuesday to raise the debt ceiling without addressing any deficit reduction issues demanded by Republicans. The plan would address the debt ceiling issue through December 31, 2014 -- past the next congressional elections.

Most Republicans would shy away from a bill that doesn't specify spending cuts or other policy changes in return for the increased borrowing authority. Yet Democrats are hopeful some Republicans would vote across the aisle to prevent the potentially catastrophic economic repercussions of a default.

If Senate Republicans require all the time-consuming steps available to them to delay action on the debt ceiling measure, a final vote might not take place until two days before the deadline for raising the borrowing limit, the Democratic aide said.

Such a Senate measure could increase pressure on the GOP-controlled House to do the same. Yet Republican House leaders have made clear they'll insist on concessions from Democrats before agreeing to raise the $16.7 trillion debt limit.

"The debt ceiling is there for a purpose. It's like the smoke alarm," said House Financial Services Committee Chairman Jeb Hensarling, R-Texas. "Democrats want to unplug the smoke alarm, and Republicans want to go out and fight the fire."

Boehner has insisted a deal to raise the debt ceiling must include deficit reduction steps to lower costs of entitlement programs such as Medicare, Medicaid and Social Security.

However, he and fellow Republicans have moved away from the demand of the tea party conservative wing of his caucus targeting the president's signature Affordable Care Act passed by Democrats in 2010 and upheld by the Supreme Court last year.

Rep. Tom Cole said, while any final deal must include repealing a tax on medical devices that's part of Obamacare, efforts otherwise to tie budget negotiations to the health care law appear dead.

On the shutdown, Obama and Democrats say the House would pass a Senate-approved spending plan to end it if Boehner allowed a vote. A CNN survey indicates that -- with 18 Republicans joining all 200 Democrats -- a slim majority in the House would support such a move.

But Boehner won't allow such a vote, Cole said.

"He basically said we're going to have a negotiation," the Oklahoma Republican said.

Poll: Most angry at both parties

While the two parties blame each other in Washington, outside the capital few get off easy.

In a national poll released Monday, most respondents said the government shutdown was causing a crisis or major problems for the country.

The CNN/ORC International survey indicated that slightly more people were angry at Republicans than Democrats or Obama for the shutdown, though both sides took a hit.

According to the poll conducted over the weekend, 63% of respondents said they were angry at the Republicans for the way they have handled the shutdown, while 57% expressed anger at Democrats and 53% at Obama.

"It looks like there is more than enough blame to go around, and both parties are being hurt by the shutdown," said CNN Polling Director Keating Holland.

Congressional approval ratings hovered at historic lows. Republican and Democrats hurled insults at each other and among themselves. The political circus in Washington even made its way to "Saturday Night Live: -- in a sketch featuring Miley Cyrus, at that.